NSW must grow coal seam gas industry to keep down prices: minister

Workplace Editor

AGL is seeking approval to increase gas prices by more than 20 per cent. Photo: Bloomberg

NSW must expand the coal seam gas industry if it is to head off surging household gas prices, new Energy and Resources Minister Anthony Roberts has warned.

His advice comes as demonstrators have sought to prevent Santos from developing its Pilliga gas reserves in the state's north-west and as another gas explorer in the north-east has been warned that local communities have been trained so they can engage in ''non-violent direct action''.

On Monday the state's leading gas retailers applied to the pricing regulator, the Independent Pricing and Regulatory Tribunal, to raise prices by as much as 20.3 per cent from July.

Anthony Roberts. Photo: Jonathan Ng

The rises apply to those households on regulated tariffs, and not the market-based offers put forward by several retailers.

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AGL wants a 20.3 per cent rise from July, while also signalling prices would rise by a further 5.5 per cent mid next year.

Even if the federal government succeeds in removing the carbon price, the gas price would still rise by 14.7 per cent from the middle of this year and by a further 10.7 per cent in the middle of next, AGL said.

The rises could increase the average household gas bill for AGL customers from about $901 a year to $1033 in 2014-15 and as much as $1136 in 2015-16.

AGL, the largest gas retailer in the state, blamed the surge in wholesale prices on the start-up of gas export projects in Queensland and the difficulty of sourcing gas from Bass Strait due to pipeline constraints.

Mr Roberts said the price rises would add $3 to $4 to a weekly gas bill.

He said the increases could be attributed to the carbon tax and pressures on the domestic gas market, and that growth of the coal seam gas industry in NSW was the key to resolving the state's energy supply problems.

''The importance of growing the natural gas industry in NSW is fundamental to this state's future economic viability but also driving the prices of gas down where we can through increase of supply,'' Mr Roberts said. Half of the proposed increase could be ''directly related to the carbon tax'', he said. The second part was due to an increase in wholesale prices.

NSW produced only 5 per cent of its gas needs, Mr Roberts said, forcing it to import the rest from other states.

Opposition Leader John Robertson said the O'Farrell government had promised to drive down cost of living prices, but would oversee increases of $150 to $200 in annual gas bills.

He said the government's promotion of coal seam gas mining during a time of drought was ''appalling''.

The government was prepared to compromise the quality of aquifers without understanding the science of coal seam gas, Mr Robertson said.

''It just shows this government is out of touch with the needs of households and completely out of touch with the difficulties our farmers are facing right now.''

NSW Greens MP Jeremy Buckingham said it was ''incredibly disappointing that the new minister is now spouting the coal seam gas industry's propaganda''.

Australia was the only country that did not have a domestic reservation policy for its gas supply to ensure that the bulk of the supply was not exported, he said.